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China’s Hard Landing Is Coming, But It’s Not The One You Expect | TIME.com

Ian Bremmer

The future of the world's second largest economy hinges on how the country's political elite responds to Xi Jinping's reforms

For years, people have worried whether China is headed for a hard landing. Those concerns are overstated―just like fears that the U.S. was going to default, or that the Eurozone was going to fall apart. But there is trouble coming in the long term: either many leaders and elites will have a hard landing, or far more troublingly, the country itself will.

But there is a hard landing coming down the road. And it’s not economic, it’s political.

Xi’s reforms are not just cosmetic. Real changes to the economy will threaten the vested interests of all the Chinese leaders who have been making significant money for themselves and their allies through inefficient investment of state capital, protection for their preferred companies, and inappropriate promotion of growth over sustainability. If the reforms are going to work, then an entire class of Chinese leaders, who have enriched themselves for over 30 years, will suddenly be on the losing end. And that’s a problem.

The fact that Xi has gone as far as he has with no pushback―no civil disobedience, no willful obstruction by leaders―is extraordinary, but we can guarantee it won’t continue forever. When pushback comes, it’s going to be as strong as the powerful people that his reforms threaten. And that will be the moment of truth for China. When that moment comes, one of two things could happen. An entire cadre of Chinese leaders suffers a hard landing; this would be for the greater good of China, as Xi’s economic fixes continue and things improve. Or these powerful elites win, and Xi’s reform process stalls out. At that point, the country could experience a much more devastating hard landing, because the legitimacy that Xi has built up will collapse, and critical environmental and economic problems in China will go unfixed. That will all lead to public disenchantment. That’s when you’ll see the real instability on the streets.

Reforms are a tremendous undertaking and a great opportunity for China; Xi has performed as well as anyone could have hoped for thus far. If he can push on with reforms despite the political pushback, we could see a much more vibrant Chinese economy. But if powerful Chinese leaders can avoid a hard landing, it will come at the expense of China itself.